Engineering & Mining Journal

AUG 2017

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NEWS-LEADING DEVELOPMENTS
4 E&MJ • AUGUST 2017 www.e-mj.com
Washington Acquires Dominion Diamond
Dominion Diamond Corp. and The Wash-
ington Companies, a group of privately held
North American mining, industrial and
transportation businesses, announced they
have entered into an arrangement where a
subsidiary of Washington will acquire all of
Dominion's outstanding common shares for
$14.25/share, a deal worth approximately
$1.2 billion. The transaction represents a
44% premium to Dominion's unaffected
share price of $9.92 on March 17.
The Dominion board unanimously ap-
proved the arrangement and recommended
that Dominion's shareholders vote in favor.
"Dominion Diamond has an excellent
collection of mining assets and a talented
and experienced management team and
workforce," said Lawrence R. Simkins,
president of Washington. "We are excited
to work with their team to extend the mine
life of the Ekati mine and continue partner-
ing with Rio Tinto in the operation of the
Diavik mine, while maintaining long-term
employment for Dominion employees."
The Washington Companies has a
long track record of building businesses
throughout North America, experience in
mining, as well as operating investments
in Canada, Simkins said.
Washington said it plans to extend the
mine life of Ekati for decades, consistent
with the current development plan.
As part of this acquisition, Washing-
ton plans to operate Dominion as a stand-
alone business. It will appoint a new CEO
based in Canada to the Dominion man-
agement team. Dominion's headquarters
will remain in Canada and it will be led
by a significantly Canadian management
team. Washington said it also plans to
deploy capital to develop both the Jay
and Fox Deep projects, while making new
investments in a reinvigorated greenfield
exploration program.
"The Washington Companies' commit-
ments to safety, operational excellence,
innovation and world-class management
teams position us favorably for long-term
success at the Ekati and Diavik mines for
the benefit of all Dominion Diamond stake-
holders," added Dennis Washington, found-
er of The Washington Companies. "I look
forward to the next chapter of continuing to
build and support successful, safe business
operations in the Northwest Territories."
The transaction is subject to customary
non-solicitation provisions, including Do-
minion's right to consider and accept su-
perior proposals. In the event of a superior
proposal, Washington will have a five-busi-
ness-day right to match the superior pro-
posal. If the arrangement is not completed
as a result of a superior proposal, the com-
pany will be required to pay Washington a
termination fee equal to $43.9 million (or
approximately 3.75% of the equity value).
To fund part of the consideration pay-
able in connection with the arrangement,
Washington has obtained fully committed
debt financing led by Credit Suisse with
Citi, UBS Investment Bank and Natixis
acting as joint lead arrangers. The balance
of the consideration will be funded with
an equity commitment from Washington
and cash on Dominion's balance sheet.
Should Washington be unable to com-
plete the arrangement due to a funding
failure, or other limited circumstances,
Washington will be required to pay the
company a reverse termination fee equal
to $70.2 million (or approximately 6% of
the equity value).
Land Exchange Bill
Introduced for PolyMet
U.S. Rep. Rick Nolan, D-MN, has intro-
duced bipartisan legislation to direct the
secretary of agriculture to move forward
with the land exchange between PolyMet
and the U.S. Forest Service (USFS).
The USFS authorized an administra-
tive land exchange for the PolyMet Min-
ing NorthMet project in its Final Record
of Decision on January 9. The purpose of
House Resolution No. 3115, The Supe-
rior National Forest Land Exchange Act
of 2017, is to accelerate transfer and
provide certainty of process. The bill was
introduced June 29 and referred to the
House Natural Resources Committee.
"We are committed to moving the pro-
ject forward in a thoughtful and expedi-
tious manner and are pleased Congress-
man Nolan is taking this step to bring clo-
sure to the land exchange process," said
Jon Cherry, president and CEO, PolyMet
Mining Corp. "In this legislation, Congress
would ratify the USFS determination that
the exchange is in the best public interest
and moves for the exchange to be complet-
ed within 90 days of the bill's enactment."
The environmental review for the
NorthMet project and land exchange was
the largest and longest in Minnesota his-
tory, concluding after 10 years. The Final
Environmental Impact Statement demon-
strates that the NorthMet project is ca-
pable of meeting all applicable state and
federal environmental standards.
PolyMet is seeking to permit, build
and operate the NorthMet copper-nick-
el-precious metals project located in the
established Mesabi Iron Range mining
district in northeastern Minnesota. The
land exchange was proposed jointly by
the USFS and PolyMet in 2010 to con -
solidate their respective land ownerships.
The terms of the land exchange pro-
posed in The Superior National Forest
Washington plans to extend the mine life of the Ekati diamond mine (above) for decades.